Bombay High Court
Pacific Basin Ihx (Uk) Ltd vs Ashapura Minechem Ltd on 20 December, 2010
Author: S.C.Dharmadhikari
Bench: S.C.Dharmadhikari
This Order is modified/corrected by Speaking to Minutes Order
ARBP24-10
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION NO.24 OF 2010
Pacific Basin Ihx (UK) Ltd .. Petitioners
versus
Ashapura Minechem Ltd
.. Respondents
ig WITH
ARBITRATION PETITION NO.25 OF 2010
Mr.Sudip Sen a/w Mr.Vishal Sheth, Ms.Aziza Khatri, Ms.Viloma
Shah i/by Hariani & Co for the petitioners.
Mr.P.K.Samdani a/w Mr.Sharan Jagtiani, Mr.Kunal Vajani &
Mr.Ankit Virmani i/by V.R.Tripathi & Associates for the
respondents.
CORAM : S.C.DHARMADHIKARI, J.
Reserved on : 28th October 2010.
Pronounced on : 20th December 2010
ORAL JUDGEMENT:-
1] This petition is filed seeking following reliefs:-
"(a) That this Hon'ble Court be pleased to declare the arbitration Award dated 8 July 2009 read with 15 March 2010 enforceable as decree of this Hon'ble Court."
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 2 2] It is submitted by the petitioners that they are a company incorporated in England and carrying on business at the address set out in the cause title. They are inter alia ship owners, ship operators and charterers. Respondent before this Court is a company incorporated under the Companies Act, 1956 having its registered office at the address mentioned hereinabove. It carries on business as exporters of Bauxite and other minerals.
3] The petitioner seeks enforcement of a foreign Arbitration Award dated 8th July 2009 and a further award dated 15th March 2010 under which the petitioners have been awarded sums more particularly set out in para 2 of the petition. A copy of the Award in relation to the main dispute and also a copy of the Award in relation to costs is annexed to the petition as Annexure A and A-1.
3] After setting out as to how the disputes arose between the petitioner and respondent in relation to three shipments stated to be forming part of Contract of Afreightment (COA) dated 25th ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 3 October 2007, it is alleged that the first three shipments were made in the months of January, March and April 2008. However, thereafter, it is alleged that there is breach on the part of the respondents which led to the commencement of arbitration in terms of the Arbitration Clause in the COA.
4] It is alleged that on or about 11th November 2008, notwithstanding this arbitration clause, respondents filed Special Civil Suit No.58 of 2008 before the Civil Court in Jamkhambalia in the State of Gujarat, praying inter alia for a declaration that the COA was null and void and injunction restraining petitioners before me from proceeding with and invoking arbitration clause under this COA, the respondents applied for and obtained ex party injunction restraining the defendants from taking any steps either in the arbitration or in the Rule proceedings. Subsequently, it is alleged that an application for transfer of proceedings in the Court of Principal Civil Judge, Jamkhambalia was filed and the Special Civil Suit was thus transferred. However, after hearing both sides on 12th January 2009, the Principal Senior Civil Judge, Jamkhambalia ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 4 vacated the ex parte order of injunction. An appeal was filed therefrom and it was heard by the High Court of Gujarat but there is no continuation of the ad-interim injunction. Therefore, the petitioners invoked arbitration, nominated Arbitrators and called upon the respondents to nominate their Arbitrators within 14 days.
It is stated that thereafter, the claim submissions were filed. Upon petitioners filing the documents and the claim statements, Arbitrator directed the respondents to file their statement of defence/ counter claim in the stipulated time. Respondents were informed that in default, the Arbitrators will proceed. Thereafter, giving one more opportunity before passing final order, the learned Arbitrator proceeded and made and published the subject Award.
Since the award was published, the respondents withdrew their appeal from Order No.A.22 of 2009 filed before the Gujarat High Court and the petitioners then served Advocate's notice annexing award and calling upon the respondents to pay the amount. It is then stated in para 19A of this petition as to how the Award in relation to the costs came to be made. It is in such circumstances that this petition has been filed.
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 5 5] In paras 20 and 21 of this petition this is what is stated:-
"20. As detailed subsequently herein, the said Award read with the Award dated 15 March 2010 is a foreign award within the meaning of Part II of the Act. The Petitioners are seeking to enforce the said Award read with the Award dated 15 March 2010 against the Respondents by way of the present petition. The Respondents are entitled appear before the Hon'ble Court and resist enforcement of the said Award read with the Award dated 15 March 2010 on grounds detailed in Part II of the Act. The Respondents are not entitled to file proceedings under Section 34 of the Act challenging the said Award. Accordingly, the Petitioners submit that the Section 34 proceedings are vexatious, an abuse of process and not maintainable in law. Further, the Section 34 proceedings have been filed in a court without jurisdiction. In fact as mentioned previously, a finding to the effect has been recorded in the order of 12 January 2009. Even on merits, the Section 34 proceedings are untenable. The Petitioners crave leave to produce and rely upon a copy of the petition filed by the Respondents in the Section 34 proceedings and the reply thereto filed by the Petitioners, at the relevant juncture. It is pertinent that in the Section 34 proceedings, the Respondents filed an application seeking interim reliefs, including an order of injunction restraining the Petitioners from taking steps to enforce/execute the said Award. An order dated 15 October 2009 has been passed by the court at Khambhaliya dismissing the application seeking ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 6 interim reliefs. Therefore no interim relief has been granted to the Respondent in the Section 34 proceedings. The Petitioners crave leave to produce and rely upon the order dated 15 October 2009 passed by the court at Khambhaliya in the Injunction Proceedings, at the relevant juncture.
21. The Petitioners state and submit that:
a) The said Award is an award passed pursuant to arbitration proceedings conducted in a reciprocal territory. The disputes referred to arbitration were commercial in nature, arising out of a breach of the COA entered into between the Petitioners and the Respondents. The claim for damages made by the Petitioners in arbitration is capable of settlement by arbitration under the laws of India.
The said Award is thus a "foreign award" as contemplated under Part II of the Act.
b) The Respondents were not under any incapacity.
As detailed previously, the Respondents were given adequate and proper notice of appointment of the Arbitrator and of the arbitral proceedings. The Respondents were given every opportunity to participate therein, but chose not to do so.
c) The arbitration agreement/clause contained in the COA is valid under the laws of England, which was the governing law chosen by the parties.
d) The said Award deals with differences which fall within the terms of the submissions to arbitration. The said Award contains decisions only on matters within the scope of the submissions to arbitration.
e) The composition of the arbitral tribunal and the arbitration procedure was in accordance with both, the arbitration agreement and the laws of England, which was the governing law chosen by parties.
f) The said Award has become final and binding on parties. No challenge to the said Award has been made before the Courts in England and as such, the time to file any such challenge has expired.
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 7 Hereto annexed and marked as Exhibit C is an affidavit sworn by Mr.Michael Henry Phillips, a solicitor practicing in London confirming that the said Award has become final and binding and is not susceptible to challenge under the laws of England.
g) Enforcement of the said Award will not be contrary to the public policy of India.
h) As on date, accounting for interest awarded, there is an amount aggregating US$ 24,704,536 and Sterling Pounds 5093 as also further sums of HK$ 473,015.70 and Sterling Pounds 2,500 due and payable to the Petitioners till date under both the final arbitration award and the award on costs.
Hereto annexed and marked as Exhibits D and D-1 respectively are statements of computation of amounts due and payable under the said final arbitration Award and the award on costs, as on date of filing of the present petition. The Respondents have not made payment of amounts due under the said Award despite being served with a copy of the said Award and being called upon to do so."
6] In the light of the aforesaid, it is pleaded that the requirement contemplated by sections 47 and 48 of the Arbitration and Conciliation Act, 1996 (Act) has been complied with and there is no impediment if this court proceeds to pass final order directing enforcement and execution of the Award against the respondents.
It is in such circumstances, that this petition has been filed in this ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 8 Court.
7] As far as Arbitration Petition No.25 of 2010 is concerned, that is claiming an injunction in the following terms:-
"(a) That the Respondents and/or its servants and/or its agents be restrained by an order of injunction from, in any manner mining and/or excavating and/or removing bauxite and/or other minerals from the mines and/or mining concessions and/or mining leases owned by and/or leased to the Respondents and its 100% subsidiary Bombay Minerals Limited either by itself directly or indirectly through its subsidiaries and/or group companies and/or companies in which the Directors of the Respondents are interested.
(b) That this Hon'ble Court be pleased to pass an order of injunction restraining the Respondents from in any manner selling and/or transferring and/or alienating and/or encumbering and/or parting with and/or disposing off any of its movable and/or immovable assets and/or properties (including but not in any way limited to monies lying in the Respondents' bank accounts, investments made by the Respondents, land and other immovable properties owned and/or occupied by the Respondents) where ever such movable and/or immovable assets may be located, within India or without.
(c) That this Hon'ble Court be pleased to direct the Respondents, by way of a mandatory order and direction to deposit in this Hon'ble Court a sum of US$ 24,704,536 and Sterling Pounds 5093 and ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 9 further sum of HK$ 473,015.70 and Sterling Pounds 2,500 together with interest thereon as awarded or to furnish security in the aforesaid sums to the satisfaction of the Prothonotary & Senior Master, High Court, Bombay."
8] It is stated that this is a petition under section 9 of the Arbitration Act claiming interim reliefs so as to enable the petitioners to enforce the award. Prayer clause (e) of this petition reads as under:-
"(e) That the Respondents be restrained by an order of injunction from, in any manner, proceeding with the Section 34 proceedings filed before the court at Khambaliya being Civil Miscellaneous Application No.111 of 2009."
9] It is stated that the petitioners have come to know that instead of resisting enforcement of the foreign award before this Court, the respondents have filed a petition under section 34 of the Act in the Court of Jamkhambalia in the State of Gujarat praying that the Award be set aside. In this petition an application for interim reliefs was made but that was not granted. It is submitted that once the enforcement proceedings are filed and section 47 of ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 10 the Act has been invoked by the petitioners, the only remedy available to the respondents is to resist the enforcement and execution and there is no provision enabling them to challenge the foreign award under section 34 of the Arbitration Act.
10] For the aforementioned reasons, it is claimed that bearing in mind the huge sum that is due and payable under the subject awards, ad-interim and interim reliefs be granted.
11] Both sides stated that these petitions are placed for hearing and final disposal together because they arise out of the same proceedings and between same parties. However, Mr.Samdani, learned Senior Counsel appearing for respondents submitted that the respondents have raised a preliminary issue of jurisdiction and maintainability of the main arbitration petition No.24 of 2010. If this objection is upheld then, the award cannot be enforced and executed by this Court. If the award itself cannot be enforced, then, no question arises of invoking this Court's jurisdiction under section 9 of the Arbitration Act to claim interim reliefs. It is in such ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 11 circumstances that I have heard the submissions of learned Counsel for both sides in Petition No.24 of 2010.
12] Mr.Samdani, learned Senior Counsel appearing on behalf of the respondents invited my attention to the affidavit in reply and contended that this Court has no jurisdiction to entertain and try this petition. It is submitted that section 34 application of the Act has admittedly been filed by the respondent on 20th July 2009 and the same is chronologically the first application which came to be filed under the provisions of the Act. It is further submitted that by virtue of Section 42 of the Act, it is only the Dist. Court Jamkhambaliya which has the exclusive jurisdiction to entertain, try and adjudicate upon any subsequent application/ petition under the Act, including the subject petition. Then, it was contended that the objection that the Dist. Court Jamkhambaliya lacks jurisdiction to entertain the section 34 application and any challenge to the jurisdiction of the Dist. Court Jamkhambaliya, has to be decided by the Dist. Jamkhambaliya.
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 12 13] In any event, without prejudice to the above, it is submitted that the Dist. Court Jamkhambaliya is a court of competent jurisdiction to entertain the Section 34 Application, inter alia because part of the cause of action for the dispute purportedly adjudicated upon by the Sole Arbitrator in rendering the said Award falls within the territorial limits of the District Court, Jamkhambaliya for inter alia the following reasons:-
(a) Under the Contract of Affreightment dated 25th November, 2007 entered into by and between the Petitioner and the Respondent (hereinafter referred to as "the COA"), one of the ports from where the COA was to be performed i.e. Bauxite cargo was to be lifted is Port Okha, which is within the territorial limits of the District Court, Jamkhambaliya. Further, one of the shipments under the COA was dispatched from Port Okha. The Respondent has various assets within the territorial limits of the District Court, Jamkhambaliya.
(b) It is further submitted that by filing the captioned Petition, the Petitioner is attempting to side-step the exclusive jurisdiction of the District Court, Jamkhambaliya, which amounts to nothing but an ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 13 abuse of process of this Hon'ble Court. Therefore, the present petition is not maintainable.
14] Mr.Samdani then submitted that once the respondents have filed the petition under section 34 of the Arbitration Act, 1996, then, the Award is under automatic suspension. He submits that in an interim application filed by the respondents in the petition under section 34 before the Dist. Court Jamkhambaliya, an interim injunction was claimed restraining the petitioners from prosecuting, pursuing any proceedings for or in relation to the execution of the said Award. This petition was dismissed by an order dated 15 th October 2009. However, the learned Judge took the view that in view of section 34 application being pending, which application is to set aside the award, by virtue of section 36 of the Act, the Award becomes unexecutable until the said application is decided.
Therefore, the petitioner cannot seek enforcement/ execution of the award. This order has never been challenged by the petitioner before me and it has attained finality.
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 14 15] Mr.Samdani then submitted that it is pertinent to note that the Petitioner had filed a Special Civil Application bearing no.12583 of 2009 before the High Court of Gujarat seeking a writ of prohibition restraining the District Judge, Jamkhambaliya from entertaining the Section 34 Application on the grounds that (i) an application under Section 34 of the Act challenging a foreign award is not maintainable since Part I of the Act is not applicable to the arbitration agreement, and (ii) the District Judge, Jamkhambaliya does not have territorial jurisdiction to entertain the Section 34 Application. The learned Single Judge of the Gujarat High Court, vide ad-interim order dated 1st December, 2009 passed in the said Special Civil Application, ordered a stay of proceedings before the District Judge, Jamkhambaliya in the Section 34 Application. Vide the said order, the said Special Civil Application was directed to be heard along with Special Civil Application No. 12021 of 2009 filed by one Eitzen Bulk A/S, being a similar matter in which ad-interim stay of proceedings before the Ld. District Judge, Jamkhambaliya in a similar application under Section 34 of the Act filed by the Respondent had already been granted.
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 15 Annexed and marked as Exhibit "B" is a copy of the said order dated 1st December, 2009 passed by the Ld. Single Judge of the Gujarat High Court in Special Civil Application No.12583 of 2009 extracted from the official website of the Gujarat High Court. The Respondent had preferred a Letters Patent Appeal (LPA) bearing No.2469 of 2009 against the ad-interim order passed in Special Civil Application No.12021 of 2009. Similarly, an LPA bearing no.
1907 of 2010 was preferred by the Respondent in the present matter challenging the aforesaid order dated 1st December, 2009, which LPA was disposed of by a Division Bench of the Gujarat High Court vide order dated 10th August, 2010 wherein it was held that the said order dated 1st December, 2009 had been passed on the basis that a similar matter was pending before the Division Bench of the Gujarat High Court, and therefore, the said order dated 1st December, 2009 required no interference. Annexed hereto and marked as Exhibit "C" is a copy of the order dated 10th August, 2010 passed by the Division Bench of the Gujarat High Court in LPA No.1907 of 2010. The LPA No.2469 of 2009 along with Special Civil Application No.12021 of 2009 has now ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 16 been disposed off by the Division Bench of the Gujarat High Court vide order dated 22nd September, 2010 whereunder the Division Bench of the Gujarat High Court was pleased to dismiss Special Civil Application No.12021 of 2009 and to hold that (i) an application under Section 34 of the Act challenging a foreign award is maintainable, and (ii) the issue of territorial jurisdiction has to be decided by the District Judge, Jamkhambaliya. Since the Special Civil Application No.12583 of 2009 filed by the Petitioner herein before the Gujarat High Court was tagged with Special Civil Application No.12021 of 2009, the Respondent is in the process of making an application for disposal of Special Civil Application No. 12583 of 2009 in the same manner as Special Civil Application No. 12021 of 2009.
16] Therefore, he submits that the award is not capable of being executed and enforced and this Court in any event cannot proceed with the subject petition. Thus Mr.Samdani submits that this Court is not competent to rule upon maintainability of the proceedings in the Court at Jamkhambaliya. Further, this Court cannot decide as ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 17 to whether a foreign award can be challenged under section 34 of the Arbitration and Conciliation Act, 1996. All these matters have been already decided or in any event can be decided. in the competent court of Jamkhambaliya in Gujarat. He submits that in the petition, the petitioner has stated in para 3 that the COA in this case is similar to COAs with other ship owners/ ship operators i.e. British Marine PLC, Armada Shipping Pte. Ltd. And Eitzen Bulk A/s. Mr.Samdani submits that at page 345 of the paperbook is a copy of the order of the Division Bench in the case of Eitzen wherein identical pleas and objections were raised with regard to the maintainability and particularly on a petition under section 34 challenging a foreign award. The Division Bench of Gujarat High Court has ruled that such petition is maintainable. That ruling will cover the case of the petitioners herein. Therefore, the petition filed by the petitioners in the Gujarat High Court stands decided in terms of the Division Bench order and ruling. That is binding on the petitioners herein, as long as the same is not reversed or set aside by a higher court. Hence, it is not open for the petitioners to argue that this foreign award should be enforced by means of present ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 18 petition ignoring pendency of proceedings in the Gujarat High Court.
17] Even otherwise, according to Mr.Samdani, section 42 of the Arbitration and Conciliation Act, 1996 is clear. It is corresponding to section 31(4) of the Arbitration Act, 1940 (for short 1940 Act).
Both provisions envisage control of one court. Mr.Samdani has, therefore, invited my attention to the Division Bench judgement of the Gujarat High Court, a copy of which is Exh.C to the affidavit in reply of the respondents in great details and has contended that, that order is in the case of present respondent. In such circumstances, this Court should not entertain any objection to the maintainability of the Gujarat Court proceedings or the objections to its territorial jurisdiction. This Court should go by the principles laid down by section 42 and apply the bar thereunder. In other words, the present petition should not be taken up until Gujarat High Court proceedings are disposed of.
18] In support of his submissions, Mr.Samdani has relied upon ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 19 following decisions:-
(1) 1953 SCR 878:AIR 1953 SC 313 (Kumbha Mawji Vs. Dominion of India (Now The Union of India);
(2) (1981) 4 Supreme Court Cases 634 (M/s.Guru Nanak Foundation Vs. M/s.Rattan Singh and Sons);(3)
AIR 1999 Delhi 11 (M/s.D.L.F.Industries Ltd Vs. Standard Chartered Bank & Anr);
(4) (2006) 11 Supreme Court Cases 521 (Jindal Vijayanagar Steel (JSW Steel Ltd) Vs. Jindal Praxair Oxygen Co Ltd;
(5) (2000) 3 Supreme Court Cases 755 (Khaleel Ahmed Dakhani Vs. Hatti Gold Mines Co Ltd);
(6) (1998) 1 Supreme Court Cases 305 (Sumitomo Heavy Industries Ltd Vs. ONGC Ltd & Ors);
(7) (2004) 1 Supreme Court Cases 540 (National Aluminium Co Ltd Vs. Pressteel and Fabrications (P) Ltd & Anr) ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 20 19] On the other hand Mr.Sen controverting the submissions of Mr.Samdani submits that mere filing of petition under section 34 of the Arbitration Act and that too in a court in Gujarat does not mean that the enforcement of the subject foreign award is automatically suspended. Mr.Sen was at pains to take me through the scheme of Arbitration Act and particularly in relation to enforcement of foreign awards. He submits that once the agreement to which a reference is made in the chapter pertaining to foreign awards are perused carefully, it would be apparent that there is no scope for invoking section 42 of the Act. Mr.Sen submits that the argument of Mr.Samdani proceeds on complete misconception and misreading of the Act. These arguments overlook section 2(5) of the Arbitration Act . Further, when one is referring to competency of Courts then, section 2(e) of the Act defining the term "Court" is relevant. Once the language of section 2(5) is taken into consideration, then, it is not open for anybody to argue that a foreign award can be challenged or impugned as if it is a domestic arbitration and an award rendered therein. There are distinct ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 21 provisions in the Arbitration Act, 1996. A domestic award can be challenged and set aside by a court as defined in section 2(e) of the Act whereas a foreign award cannot be so challenged but its unenforcement only can be resisted. It is when award is brought for enforcement in India, its execution and enforcement can be resisted and that too in terms of section 48, if it is a New York Convention award and section 55 if it is a Geneva Convention Award.
20] Mr.Sen refers to the convention in details to buttress his point that the latter part of section 2(5) speaks of an agreement and New York convention is an agreement. Therefore, once it is a foreign arbitration and foreign award, the duty of Indian Courts is to enforce and execute it and while such an exercise is undertaken in India, the person against whom the award is made has to resist it on specific grounds. The resistance is to enforcement and execution and once that is removed, the Court can enforce and execute the award. Similarly, if there are no pleas raised to enforcement and execution, then, the award is enforceable straight ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 22 away and the court is duty bound to do so.
21] Assuming without admitting that a petition under section 34 could have been filed but it must be shown to be validly filed to oust the jurisdiction of competent court to enforce a foreign award.
Mr.Sen submits that language of section 31(4) and section 42 is different. Section 42 must be seen in the backdrop of section 2(5).
The enforcement of foreign awards cannot be sought by approaching the court specified in section 2(e) of the Act but for that purpose a Court specified in section 45 alone must be approached. In other words, there is no linking of section 2(e) with section 47 or else there is a danger and risk of foreign award being treated as a domestic award. Mr.Sen submits that explanation to section 47 cannot be ignored and if that is taken into account, pendency of petition under section 34 of the Act will not operate as stay of enforcement on foreign award. The language of section 36 and section 49 of the Act is different.
22] Mr.Sen submits that there is no dispute that part II of the ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 23 Arbitration Act is applicable to foreign Awards. A propounder or holder of foreign award cannot take recourse to part I of the award except seeking interim measures in terms of section 9 falling therein. A person who has a foreign award in his favour has no remedy save and except approaching a competent court under section 47 of the Act. Once part II applies then, the definition of the term court in part II must apply and then it is not permissible for parties to import section 2(e) and apply it while enforcing foreign award. Section 42 falls in part I and will have no effect on part II.
In any event, there is a conscious deviation from section 31(4) of the old Arbitration (1940) Act and that is in keeping with the Legislative intent and particularly while inserting section 2(5) therein. Mr.Sen emphasises that there is difference between a challenge to the arbitral award and a provision enabling resistence to its enforcement. That distinction has been completely overlooked by Mr.Samdani and, therefore, his arguments are not well founded.
23] Mr.Sen submits that reliance on the Division Bench ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 24 Judgement of Gujrat High Court, a copy of which is at Exh.C to the reply is of no consequence because that judgement has only pursuasive value. It is not binding on this Court. Further, merely because a foreign award is allegedly challenged, there is no automatic stay in view of pendency of the challenge to it. There is difference between section 36 and other provisions in the Act.
Mr.Sen submits that the award is still enforceable and when the respondent applied for stay of the same even before Gujarat High Court it was refused. That order is final. In such circumstances and when part II of the Act still applies, then, there is no question of any principle of res judicata being invoked merely because of the judgement delivered by Gujarat High Court. Mr.Sen submits that sections 48(1)(e) and section 48(3)(d) be noticed. The award which is a foreign award can be only challenged in the court within the jurisdiction of which it has been delivered or made. In the instant case, the proceedings were governed by English law and under English law, the respondent could not have challenged the award by invoking the provisions similar to section 34 of the 1996 Act. Assuming that the award could have been challenged, it can ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 25 be only be done by applying to competent authority referred to in section 48(1)(e). The court enforcing the award may if it deems proper adjourn the decision on the enforcement of the award and may also on the application already claiming enforcement of the award, order other party to give suitable security. Therefore, it it is the contention of the respondent that the foreign award is not yet binding on the parties or the same has been suspended by competent authority of the country in which or under the law of which that award was made, then, everything that is set out in section 48(3) must apply. Therefore, assuming that the Court at Jamkhambaliya is seized of the application raising challenge to the subject arbitral award and assuming further that by filing such an application in that Court, the award is not binding as yet, then, the respondents should be made to abide by section 48(3).
24] Mr.Sen vehemently submitted that the judgement of the Supreme Court in the case of Venture Global Engineering Vs. Satyam Computer Services Ltd and Anr reported in (2008) 4 SCC 190 is inapplicable on facts. Therein, no reference is made to ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 26 section 47 of the Act. Mr.Sen has invited my attention to paras 31 and 35 of the judgement of the Supreme Court in the case of Satyam (supra) in this behalf.
25] Lastly, Mr.Sen submits that even on merits there is no substance in the challenge raised as the award cannot be said to be contrary to public policy of India. For all these reasons Mr.Sen submits that the petition be entertained and since there is no resistance to the enforcement and execution of the subject award the petition be made absolute as well.
26] Mr.Sen relied upon the following decisions:
(1) AIR 1994 SC 1715 (Brace Transport Corporation of Monrovia, Bermuda Vs. Orient Middle East Lines Ltd, Saudia Arabia & Ors);
(2) (2008) 4 Supreme Court Cases 190 (Venture Global Engineering Vs Satyam Computer Services Ltd & Anr) ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 27 27] For properly appreciating the rival contentions a reference to the relevant statutory provisions will have to be made. But, before making it the basic facts need to be noticed.
28] The petitioners seek to enforce a foreign award. The respondents may have in their petition under section 34 challenged the Award on several grounds yet for the purpose of the present petition it will have to be assumed that the petitioner invokes section 47 of the Arbitration Act. The petitioner invokes section 47 on the basis that the award in question falls in Chapter I of Part II of the Act and the New York Convention. The petitioner states that it has satisfied all the requirements that are provided in section 47 viz the award in question is passed pursuant to arbitration proceedings conducted in reciprocal territory. The petitioner has annexed a notarized copy of the award made and published as Exhibit A. Thus, section 47(1)(a) stands complied with. The petitioner has also annexed as Exhibit B a certified notarized copy of COA together addendum-1 dated 24th November ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 28 2007. Thus, original agreement for arbitration or a duly certified copy thereof as required to be produced under section 47(1)(b) which is duly produced.
29] The petitioner has set out in the petition that the award is a foreign award. Averments in paragraph 5 to 9 would show that the award in question is a foreign award.
30] Petition is filed on the basis that by virtue of the explanation below section 47 the award will have to be filed in the Principal Civil Court of original jurisdiction in the district having jurisdiction over the subject matter of the award, if the same had been subject matter of the suit. In para 24 of the petition this is what is stated:-
"24. The respondents have their registered office and carry on business in Mumbai. The respondents have bank accounts and other assets, including immovable properties and monies in Mumbai. The COA was entered into in Mumbai. Under the circumstances, this Hon'ble Court has the jurisdiction to receive, entertain and try the present petition."
31] In such circumstances, for the present I will have to proceed ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 29 on the basis that the petitioner has satisfied with the requirements of section 47 of the Act.
32] Since reliance is placed upon section 2(e) and section 2(5) of the Act, they are reproduced herein below:-
"2. (e) "Court" means the principal civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject- matter of the arbitration if the same had been the subject- matter of a suit, but does not include any civil Court of a grade inferior to such principal civil Court, or any Court of Small Causes;
2(5) Subject to the provisions of sub-section (4), and save insofar as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this Part shall apply to all arbitrations and to all proceedings relating thereto."
33] Further it would also be appropriate to reproduce section 36 and 42 falling in Part I and section 44 and 48 in Part II of the Act.
"36. Enforcement.- Where the time for making an application to set aside arbitral award under section 34 ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 30 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 to 1908) in the same manner as if it were a decree of the Court."
"42. Jurisdiction.- Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."
44. Definition.-In this chapter, unless the context otherwise requires "foreign award" means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960-
(a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and
(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.
48. Conditions for enforcement of foreign awards.- (1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the Court proof that-
(a) the parties to the agreement referred to in ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 31 section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
1. the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or
1. the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
(2)Enforcement of an arbitral award may also be refused if the Court finds that-
(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 32 India; or
(b) the enforcement of the award would be contrary to the public policy of India.
Explanation.- Without prejudice to the generality of clause (b) of this sub-section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.
(3) If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the Court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security."
34] Mr.Sen would like me to hold at this stage itself that this being a foreign award the object and purpose of inserting sections 44 to 52 in Part II Chapter I would be defeated if as an answer to this petition for enforcement of the award, the respondent is permitted to urge that the award is not final and binding as it is challenged in the Court of Jamkhambaliya. In this behalf, he has invited my attention to the judgement of the Supreme Court reported in A.I.R. 2001 S.C. 2293 (M/s.Fuerst Day Lawson Ltd. Vs. Jandal Exports Ltd). He relies upon paras 28 to 30 of this decision ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 33 in support of his arguments.
35] In this case the Supreme Court was considering a controversy as to whether a foreign award can after the commencement of the 1996 Act be governed thereby although arbitration proceedings had commenced in such case prior to enforcement of the Act of 1996. It is in that context the Supreme Court made the observations relied upon by Mr.Sen and held that prior to enactment of the 1996 Act, the law of Arbitration in this country was substantially contained in three enactments viz., Arbitration Act, 1940, Arbitration (Protocol & Convention) Act, 1937 and Foreign Awards (Recognition and Enforcement) Act, 1961.
Therefore, earlier a party holding a foreign award was required to take recourse to these enactments. Preamble of the Act makes it abundantly clear that it aims to consolidate and amend Indian laws relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards. The object of the Act is to minimize supervisory role of Court and to give speedy justice.
Therefore, no separate proceedings one for deciding the ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 34 enforceability of the foreign award and other thereafter for execution are contemplated. Relying upon the judgement reported in A.I.R. 1999 S.C. 3923 (Thysssen Stahlunion GMBH Vs. Steel Authority of India Ltd.) the Supreme Court held that under the new Act foreign award is already stamped as a decree and, therefore, a party holding a foreign award can apply for enforcement of it but the Court taking further effective steps for execution has to proceed under sections 47 to 49. In one proceedings, there may be different stages. In the first stage the court may have to decide about enforceability of the award having regard to the requirement of the said provisions. Once the Court decides that foreign award is enforceable, it can proceed to take further effective steps for execution of the same. Hence, thereafter, there is no question of making foreign award as rule of court or decree again. Thus, to avoid multiplicity of proceedings for enforcement of foreign award, there is no need to take out separate proceedings one for enforceability of the foreign award and to make rule of court or decree and other to take up execution thereafter.
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 35 36] True it is that the object and purpose has been noted in this decision and the Supreme Court holds that an interpretation which would subserve and further the object must be placed on these provisions. However, the controversy before me is whether by virtue of the application filed by the respondent at the Court at Jamkhambaliya, can I proceed to enforce this foreign award or is this court obliged to wait until that application is decided. Mr.Sen would like me to hold at this stage itself that the application filed under section 34 of the Act to challenge the foreign award is not maintainable at all. He, therefore, relies upon section 2(5) of the Act and submits that the Part I applies to all arbitration and to all proceedings subject to the provisions of section 2(4).
37] Mr.Sen submits that this provision rules out applicability of Part I of the Arbitration to an Award under New York convention.
He submits that section 44 of the Act speaks of foreign award and by virtue of the fact that there is an agreement in force and India is one of the countries which are parties to the convention set forth in the first schedule to the Act, applicability of part I is ruled out ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 36 altogether save and except to the extent indicated by the Supreme Court in the Judgement of Bhatia International Vs. Bulk Trading S.A. reported in A.I.R. 2002 S.C. 1432=(2002) 4 SCC 105.
38] Mr.Sen submits that reliance upon section 42 by Mr.Samdani is misplaced because that section also opens with non obstante clause. Once Part I itself is not applicable, then, it is not for any other court to enforce a foreign award and any challenge to the foreign award is ruled out. In other words, once it becomes inapplicable, challenge to the foreign award, as if it is a domestic award cannot be laid in the court as contemplated by section 2(e) of the Act, is his submission. He also submits that what is applicable is the explanation below section 47 and subsection 3 of section 48. He submits that section 48 speaks of conditions for enforcement of foreign award and sub-section 3 falling thereunder would demonstrate that the decision on the enforcement of foreign award can be adjourned only if an application for setting aside or suspension of the award has been made to the competent authority and that competent authority is the one specified in ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 37 section 48(1)(e) of the Act and none other. Mr.Sen was also at pains to point out that section 42 is a marked departure from section 31 of the 1940 Act and any reliance on the earlier provisions would, therefore, be misplaced. Equally, Mr.Samdani would submit that the phraseology of S.2(e) and the explanation to S.47 is identical so also this controversy is covered by the decision of the Supreme Court in the case of M/s.Venture Global Vs. Satyam (supra). Further, he submits that the Gujarat High Court judgement binds the petitioner.
39] Ordinarily, I would have gone into these submission and particularly because while raising the issue of jurisdiction and maintainability of this petition, Mr.Samdani countered Mr.Sen's arguments. However, the proceedings initiated by the respondents are pending in the Court at Jamkhambaliya in the State of Gujarat.
The petitioner has raised before me the issue of maintainability of these proceedings and the jurisdiction of the Court at Jamkhambaliya to take cognisance of a challenge to foreigh award. Therefore, it would be proper if the petitioner raises all ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 38 such contentions as are raised before me in the Court at Jamkhambaliya. That the petitioner more or less followed this course is clear from the fact that it filed special civil application No. 12583 of 2009 before Gujarat High Court seeking a writ of prohibition restraining Dist. Court Jamkhambaliya from entertaining the application filed by the respondents and under section 34 of the Act. The learned Single Judge of Gujarat High Court vide ad-
interim order dated 1st December 2009 passed in the said Special Civil Application ordered the stay of proceedings before the Dist Judge Jamkhambaliya and directed that the said application be heard along with another Special Civil Application No.12021 of 2009 filed by one Eitzen Bulk AS. The respondent preferred Letters Patent Appeal against this ad-interim order in EitzenBulk's matter. Similarly, it preferred an LPA No.1907 of 2010 challenging the order dated 1st Deecember 2009 passed in the petitioner's special civil application. However, the Division Bench of Gujarat High Court observed that similar matter is pending for consideration in LPA No.2469 of 2009 and the question involved is whether a foreign award can be challenged by a petition under ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 39 section 34 of the Arbitration Act and, therefore, the order of admission and grant of interim stay, when similar issue is pending before the Division Bench, cannot be said to be arbitrary and hence requires no interference.
40] It is in these circumstances and when petitioner's special civil application bearing No.12583 of 2009 is pending, then, it would not be proper for me to consider the contentions raised by Mr.Sen as that would mean encroachment on the power of competent court in Gujarat so also that of the Gujarat High Court to decide identical issues in pending proceedings. As a matter of judicial discipline and regard and respect for a coordinate court, it would not be proper for me to decide these matters.
41] Even otherwise, Mr.Sen does not dispute that the judgement of the Supreme Court in the case of Venture Global Engineering Vs. Satyam Computer Services reported in 2008 (4) SCC 190 is a relevant ruling on this issue. He sought to distinguish it by pointing out that overriding effect of section 47 of the Act and the argument ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 40 of its rigor has not been raised in the case before the Supreme Court and hence it would be open for me to consider it. Similarly, he submits that section 2(5) may have been referred to but the Supreme Court in Bhatia's case (supra) and Venture Global's case (supra) holds that as far as foreign awards are concerned, Part II is the governing part. If it is the governing part then recourse to S.34 is impermissible while challenging a foreign Award. S.34 falls in Part I and as far as a foreign Award is concerned it cannot be challenged in India. Hence, some of the aspects of the controversy are still open despite this judgement.
42] He refers to the facts in the case of Satyam (supra) and invites my attention to paras 31 and 35 thereof.
43] On the other hand, Mr.Samdani has contended that this judgement has been fully considered by the Division Bench of Gujarat High Court in an identical contract and it has been held that the awards like the subject foreign award can be challenged under section 34 of the Act. In any event, according to ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 41 Mr.Samdani, this concerns the issue of maintainability of the proceedings at Jamkhambaliya and touches that court's jurisdiction. This issue must be raised and decided in that court alone and I have no such power or authority in law to go into the same.
43] On the other hand, Mr.Sen contends that this Court is enforcing an foreign award. It is a High Court and its jurisdiction as a superior court cannot be displaced and particularly it cannot be held that a court of inferior jurisdiction at Jamkhambaliya will have jurisdiction, despite the pending proceedings in this court.
He also submits that something more in law must be placed so as to hold that this Court is precluded from going into the afore-raised issues.
44] In my view, at this stage, it would not be proper to go into the rival contentions on the point of jurisdiction of the court at Jamkhambaliya. This court cannot go into the issue as to whether the court at Jamkhambaliya has exclusive jurisdiction to entertain, ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 42 try and adjudicate the application filed under section 34 of the Act by the respondent. I am in agreement with Mr.Samdani that challenge to the jurisdiction of the Dist. Court Jamkhambaliya must be raised before that court and it should be dealt with by that court.
Whether the court is of competent jurisdiction or not is a matter which is best left to that court and particularly because the petitioner has already raised the necessary pleas by adopting proceedings in the High Court of Gujarat as well.
45] However, I am not in agreement with Mr.Samdani that merely because the application under S.34 is filed by the respondent in Jamkhambaliya Court, it is that court which will have exclusive jurisdiction to entertain, try and adjudicate any subsequent applications/ petitions under the Act including the present petition.
Save and except relying upon section 31(4) of the 1940 Act and section 42 of the present Act and some decisions of the Supreme Court on this point, Mr.Samdani was unable to show me any provision in law enabling the Jamkhambaliya court to enforce and execute subject foreign award.
::: Downloaded on - 09/06/2013 16:42:34 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 43 46] Admittedly, the petition is filed on the basis that the award is a foreign award. The petition is filed in Bombay High Court on its (Original Side) on the basis that respondent have their registered office and carry on business in Mumbai and that they have bank account and other assets, including immovable properties and monies in Mumbai. The COA was entered into in Mumbai. This is the clear assertion in para 24 of the petition. In reply to this assertion in the petition, in para 6.3 of the reply all that is stated by the respondent is that it repeats and reiterates the contents of the application under section 34 of the Act filed in the court at Jamkhambaliya at Gujarat and the reply to the petition filed under section 9 (Petition No.25 of 2010) and deny whatever is contrary and inconsistent therewith.
47] As far as the reply to the petition under section 9 is concerned, it is once again stated therein that the petition under section 34 of the Act has been filed on 20th July 2009 in the Court of Jamkhambaliya and the same is chronologically the first ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 44 application. However, on perusal of the entire reply in arbitration petition No.25 of 2010 I have not been able to cull out any denial of the assertions of the petitioners in para 24 of the Arbitration Petition No.24 of 2010. There is no denial of the fact that COA was executed in Mumbai, respondents have their registered office at Mumbai, their immovable properties and bank accounts are in Mumbai. In such circumstances, how this Court does not have territorial jurisdiction or that it ceases to have jurisdiction to entertain and try the petition for enforcement of the subject foreign award, has not been clarified at all. Mere reliance on section 42 would not be of any assistance to the respondent. It is contented that since section 42 begins with non-obstante clause and that an application under section 34 of the Act falls under Part I and that has been made in the Court of Jamkhambaliya, that Court shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of the agreement and arbitration proceedings shall be made in that Court and no other Court.
However, once there are no denials of the assertions in para 24 of the petition and further the COA stating "charterers place of ::: Downloaded on - 09/06/2013 16:42:34 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 45 business" is Mumbai (see clause a) place and date of COA is also Mumbai then merely relying upon section 42 and the pending proceedings in Jamkhambaliya Court is not enough. The respondents are required to show something more so as to displace this Courts jurisdiction to entertain and try the instant petition. This petition is styled as petition under section 47 of the Act. When I have held that the petitioner has produced evidence, when it applied for enforcement of the foreign award, viz. the original award, a copy thereof duly authenticated in the manner required by the law of the country in which it was made, the original agreement for arbitration or duly certified copy thereof and that they have satisfied the Court that the subject award is a foreign award, then, it will not be possible to agree with Mr.Samdani that mere pendency of the proceedings in the Jamkhambaliya Court or on account of wording of section 42 of the Act, this Court has no jurisdiction to entertain and try the petition.
In the view that I have taken it is not necessary to decide any wider question and particularly whether section 31(4) of the 1940 Act and section 42 of 1996 Act are identical and there is no change or that ::: Downloaded on - 09/06/2013 16:42:35 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 46 there is a departure in the 1996 Act from the position prevailing under the 1940 Act. This controversy and pleas raised in that behalf can be gone into at an appropriate stage or in an appropriate case if necessary materials in that behalf are produced. Today without laying the necessary factual foundation to displace this Courts jurisdiction and merely relying upon the decision of the Supreme Court in the case of Kumbha Mawji Vs. Dominion of India (Now the Union of India) reported in AIR 1953 SC 313 or the further decision in M/s.Guru Nanak Foundation Vs. M/s.Rattan Singh & Sons reported in (1981) 4 SCC 634, it cannot be held that this Court has no jurisdiction to entertain and try the instant petition. Equally reliance on the single Judge's judgement reported in AIR 1999 Delhi 11 (DLF Industries Vs. Standard Chartered Bank) is misplaced because the factual background and the finding recorded in paras 6 and 7 by the learned single Judge are distinct to this case. It may be noticed almost immediately that the learned single Judge of Delhi High Court was not dealing with a controversy pertaining to a foreign award and when it is challenged in a domestic Court. The case was based upon a ::: Downloaded on - 09/06/2013 16:42:35 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 47 domestic arbitration. On the other hand, in the decision reported in 2006(11) SCC 521 (Jindal Vijay Nagar Steel Ltd Vs. Jindal Praxair Oxygen Co Ltd) the Supreme Court holds that this Court had jurisdiction to entertain the petition under section 9 because even if no cause of action had arisen within its jurisdiction, the respondent had an office at Mumbai and that was held to be enough to entertain the petition under section 9 of the Act. On the pleas raised before me if Petition No.25 of 2010 could have been validly filed in this Court, going by the law laid down by Jindal's case, then, I see no reason why the Court cannot entertain the main petition seeking enforcement of the foreign award. As held above, any wider controversy need not be answered.
48] Lastly and alternatively, Mr.Sen had urged that if this Court is of the opinion that if it cannot enforce the subject foreign award until the proceedings in Gujarat are concluded then, this Court should adhere to the mandate of section 48(3) and not adjourn the hearing of these petitions unconditionally. In other words he relies upon sub-section 3 of section 48 and 48(1)(e) and contends that ::: Downloaded on - 09/06/2013 16:42:35 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 48 the mandate flowing from that section must be applied and followed in this case. He submits that frivolous contentions and technical objections have been raised with a view to defeat and delay the enforcement and execution of the foreign award. Once the respondent had an opportunity to resist the enforcement of subject foreign award by producing the necessary proof before this Court as contemplated by section 48(1) of the Act then, not availing of that opportunity but postponing the enforcement by relying upon proceedings which are pending in the State of Gujarat shows that their conduct is such which makes them unworthy of any assistance from this Court, much less grant of any discretionary and equitable relief in their favour.
49] Mr.Samdani in answer to this has contended that as long as this Court is not satisfied that the foreign award is enforceable, there is no question of seeking any security or making any conditional order as desired by Mr.Sen. Mr.Samdani has invited my attention to sections 49 and 36 of the Act to buttress his submission that as long as the challenge is pending it cannot be ::: Downloaded on - 09/06/2013 16:42:35 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 49 said that the award is capable of being enforced.
50] Once again any wider controversy need not be decided. It is not necessary to probe into the issue as to whether after disposal of the proceedings before the Court in Gujarat finally, the respondents can avail of section 48 and resist the enforcement once again. Assuming any such remedy is available to them after final disposal of the proceedings initiated by them in the State of Gujarat, today, what they are seeking is postponement of hearing of the instant petitions. When the respondents are seeking postponement and adjournment on the ground that the matter is pending before the Court at Jamkhambaliya and all issues of maintainability and jurisdiction of that Court have to be necessarily raised there and this stand having been accepted by me, then, they cannot seek postponement of the instant proceedings indefinitely and delay the matter in such a manner, So as to defeat the petitioner's right to seek enforcement of the subject foreign award. These petitions cannot be adjourned without any conditions as regards furnishing security being imposed on the respondent.
::: Downloaded on - 09/06/2013 16:42:35 :::This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 50 51] I have already reproduced entire section 48. Sub-section 3 thereof is clear in as much as without going into the issue as to whether the Court at Jamkhambaliya is a competent authority referred to in section 48(1)(e) for setting aside or suspending the award, yet, going by the fact that a petition under section 34 is filed in that Court and it is pending so also a request being made that the award must notbe enforced till pendency of that petition, then, it would not be proper to adjourn these matters simplicitor and without any conditions.
52] Moreso, when one petition is under section 47 for enforcement of the award, while the other is seeking interim measures under section 9 of the Act. Mr.Samdani prays for postponement and adjournment of both petitions. Therefore, atleast on the petition under section 9 of the Act, conditional order can be made while adjourning its hearing to a future date. In these circumstances and there being a precedent abroad for the course that I propose to adopt, I am of the opinion that directions to give ::: Downloaded on - 09/06/2013 16:42:35 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 51 suitable security while adjourning the hearing of these petitions can be issued.
53] In Justice R.S.Bachawat's Law of Arbitration and Conciliation, 5th Edition 2010 under section 48 at synopsis 15, Page 2426 a reference is made to the decision of the Court of Appeal in (Dardana Ltd Vs. Yokos Oil Co, reported in (2002) 2 Lloyd's Report 326 (Court of Appeals)). Discussing that decision it has been commented that a court can consider inter-alia whether proceedings initiated indicate an intent to hinder or delay resolution of the dispute and a balance of the possible hardships to each of the parties. While referring to some other decisions what has been observed that the confirming Court should be very selective in staying enforcement proceedings. This approach is very important to ensure that the main objectives of New York Convention are not defeated. If the discretion to grant stay is not sparingly exercised, every person against whom an award is passed would start annulment proceedings and bring enforcement proceedings in the other part of the world to a halt. Therefore, the repercussions of ::: Downloaded on - 09/06/2013 16:42:35 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 52 adjourning matters simplicitor would be serious. A trend may start where by mere pendency of proceedings for setting aside or suspending a foreign award, its enforcement would be stalled indefinitely. Likewise, hastening the process of enforcement would take away the discretion of the Court where enforcement proceedings are pending to consider a request for adjourning the decision on the enforcement of the Award. Therefore, going by the phraseology of section 48(3) it is clear that it gives opportunity to both, one claiming enforcement and the other seeking postponement of decision on enforcement. The rights of both have to be balanced. Mr.Sen's contention that parties have no control over judicial proceedings in other States is not totally unfounded.
In the present case this Court also has no control over the proceedings pending in the State of Gujarat and no directions can be given to that Court. In these circumstances, considering the facts peculiar to this case, interest of justice would be sub-served if the following order is made:-
(1)The hearing of Petition Nos.24 of 2010 and 25 of 2010 is ::: Downloaded on - 09/06/2013 16:42:35 ::: This Order is modified/corrected by Speaking to Minutes Order ARBP24-10 53 adjourned till the disposal of the petition filed by the respondents under section 34 of the Arbitration Act in the District Court of Jamkhambaliya but on the condition that they furnish security in the sum of sterling pounds 24,157,442.00 and 5,000.00 respectively within a period of twelve (12) weeks from today.
(S.C.DHARMADHIKARI, J) ::: Downloaded on - 09/06/2013 16:42:35 :::